Sampson, In re
| Decision Date | 21 June 1993 |
| Docket Number | No. 92-1238,92-1238 |
| Parties | , 29 Collier Bankr.Cas.2d 198, Bankr. L. Rep. P 75,348 In re Ira N. SAMPSON, individually and as a general partner of Tuchas Associates, a Colorado general partnership, Debtor. Katherine Lavonne SAMPSON, Plaintiff-Appellee, v. Ira N. SAMPSON, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Harry Michael Sterling (Dana A. Temple with him on the brief), Gelt, Fleishman & Sterling, Denver, CO, for defendant-appellant.
Dennis A. Lacerte, Case & Lacerte, Denver, CO, for plaintiff-appellee.
Before BALDOCK, WOOD * and EBEL Circuit Judges.
Debtor and Defendant in the instant proceeding Ira N. Sampson appeals from a district court order 142 B.R. 957, affirming a bankruptcy court order which denied discharge of a debt to his former wife, Plaintiff Katherine Lavonne Sampson, because it was in the "nature of alimony, maintenance or support" within the meaning of 11 U.S.C. § 523(a)(5). Our jurisdiction arises under 28 U.S.C. § 158(d), and we affirm.
After nine years of marriage, Plaintiff and Defendant divorced in 1984. An agreement between the parties, entitled "Property Settlement and Permanent Orders Agreement" ("the Agreement"), was incorporated into the divorce judgment filed in the state court proceeding. In Article I of the Agreement, entitled "Maintenance (Spousal Support)," Defendant agreed to pay Plaintiff "as and for maintenance, a specific monthly amount" over an eight year period, commencing in June 1984. 1 The Agreement stated that "said maintenance payments are for the support of [Plaintiff] and are not in lieu of or partially in lieu of property division and that the parties have herein agreed to a fair and equitable division of marital property as hereinafter provided." The division of marital property was specifically addressed in Article III of the Agreement and included a cash payment to Plaintiff over a two year period which is not at issue in this case.
In November 1990, Defendant filed a voluntary petition under Chapter 7 of the Bankruptcy Code. Plaintiff filed a complaint with the bankruptcy court to determine the dischargeability of Defendant's "maintenance" obligations under the Agreement. At an evidentiary hearing before the bankruptcy court, Defendant, Defendant's attorney in the divorce proceeding, and Defendant's accountant testified that the payments were intended to be a property settlement, but were designated as maintenance so that Defendant could deduct the payments from his gross income for tax purposes. Plaintiff testified that she did not remember these particular distinctions, and Plaintiff's divorce attorney was deceased by the time of the hearing. It is undisputed that at the time of the divorce, Plaintiff was a full-time homemaker with no independent income, an arthritic condition which hindered her employment, no job skills or training although she had worked as Defendant's secretary prior to their marriage, and monthly living expenses of $4,165. It is also undisputed that, at the time of the divorce, Defendant was a mortgage banker with a monthly income of approximately $14,850 and monthly living expenses of $3,795. 2
The bankruptcy court found that the Agreement unambiguously provided that Defendant's debt to Plaintiff was for maintenance. The bankruptcy court reasoned that our decision in In re Yeates, 807 F.2d 874 (10th Cir.1986), precluded it from considering extrinsic evidence to the contrary. 3 Accordingly, the bankruptcy court found that the debt was nondischargeable. However, the bankruptcy court stated that, if it could look beyond the Agreement, it would find that both parties intended the obligation as property settlement. According to the bankruptcy court, "the parties unambiguously said something that they didn't intend" in order to "disguise[ ]" a property settlement as maintenance so that Defendant could take the tax deduction. The bankruptcy court made these additional findings in order to avoid the necessity of another hearing should its judgment be reversed on appeal.
Defendant appealed the bankruptcy court's order to the district court. The district court held that the bankruptcy court erred in not looking beyond the unambiguous Agreement to determine whether the obligation was actually in the nature of alimony, maintenance or support. The district court also disagreed with the bankruptcy court's alternative finding that the parties intended the obligation as property settlement. The district court considered the agreement itself, the fact that payments extended over an eight year period, the gross imbalance of income between the parties at the time of the divorce, and Plaintiff's lack of marketable skills in "conclud[ing] that the parties intended the obligation as alimony, maintenance or support." Therefore, the district court affirmed the bankruptcy court's order on an alternative ground.
On appeal to this court, Defendant contends that the district court erred in redetermining the bankruptcy court's factual findings. In reviewing a bankruptcy court order, the district court sits as an appellate court and must accept the bankruptcy court's factual findings unless they are clearly erroneous. In re Robinson, 987 F.2d 665, 667 (10th Cir.1993). Whether an obligation to a former spouse is actually in the nature of support is a factual question subject to a clearly erroneous standard of review. See In re Goin, 808 F.2d 1391, 1393 (10th Cir.1987) (per curiam); Yeates, 807 F.2d at 877. See also Bankr.R. 8013. Defendant notes that Plaintiff did not cross-appeal the bankruptcy court's alternative finding and argues that, because the only issue before the district court was whether the bankruptcy court applied an erroneous legal standard, once the district court determined this issue in Defendant's favor, it should have adopted the bankruptcy court's alternative finding and entered judgment for Defendant.
Defendant's argument ignores the district court's authority as a reviewing court, as well as our authority, to affirm the bankruptcy court's decision on an alternative ground which is supported by the record. See In re Slack Horner Foundries Co., 971 F.2d 577, 579-80 (10th Cir.1992); In re Calder, 907 F.2d 953, 956 n. 4 (10th Cir.1990) (per curiam). While we recognize that language in the district court's opinion suggests that it may not have applied a clearly erroneous standard but, rather, may have made independent findings concerning the parties' intent, there is no reversible error in this case because our independent review of the bankruptcy court's alternative finding leads us to conclude that it is indeed clearly erroneous. See Nitz v. Nitz, 568 F.2d 148, 152 n. 4 (10th Cir.1977) () (citation omitted).
Under Chapter 7 of the Bankruptcy Code, a debtor may discharge "all debts that arose before the date of the order for relief." 11 U.S.C. § 727(b). Excepted from discharge are debts to a "former spouse ... for alimony to, maintenance for, or support of such spouse ... [provided that] such liability is actually in the nature of alimony, maintenance or support." Id. § 523(a)(5)(B). See also id. § 727(b) (). This provision in the Bankruptcy Code "departs from the general policy of absolution, or 'fresh start' " in order to "enforce an overriding public policy favoring the enforcement of familial obligations." Shaver v. Shaver, 736 F.2d 1314, 1315-16 (9th Cir.1984) (citations and footnote omitted). See also Forsdick v. Turgeon, 812 F.2d 801, 802 (2d Cir.1987); In re Harrell, 754 F.2d 902, 906 n. 6 (11th Cir.1985). Whether a debt is nondischargeable under § 523(a)(5) is a question of federal law. Sylvester v. Sylvester, 865 F.2d 1164, 1166 (10th Cir.1989) (per curiam).
Our cases addressing § 523(a)(5), specifically our opinions in Yeates and Goin, have not articulated a consistent standard for bankruptcy courts to apply in order to determine whether a debt to a former spouse is "actually in the nature of alimony, maintenance, or support." In Yeates, we stated that "intention of the parties" was "the initial inquiry," 807 F.2d at 878, which suggests that the bankruptcy court must consider one or more additional factors in the § 523(a)(5) inquiry. We then stated, however, that "[i]f the parties did not intend to create a support obligation, then the debt is a property settlement and must be discharged in bankruptcy ... [but] if the parties intended to create a support obligation, that debt should not be discharged," id., which suggests that the parties' intent is dispositive on the question of whether a debt is nondischargeable under § 523(a)(5). Furthermore, we stated that the determination of the parties' intent "must be made by looking at the substance of the agreement viewed in the crucible of surrounding circumstances." However, we then stated that "[a] written agreement between the parties is persuasive evidence of intent, [and] if the agreement between the parties clearly shows that the parties intended the debt to reflect either support or a property settlement, then that characterization will normally control." 4 Id. (internal quotation and citation omitted). Thus, Yeates itself could be construed to be internally inconsistent.
Goin, which came out approximately a month after Yeates, articulates a seemingly different standard and does not even cite Yeates. In Goin, after recognizing that neither state law nor the parties' characterization determined whether a debt was nondischargeable under § 523(a)(5), we stated that "a bankruptcy court must look beyond the language of the decree to the intent of the parties and to the substance of the obligation." 808 F.2d at 1392 (citation omitted). We cited four factors "pertinent" to the inquiry:
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